Colony Bankcorp to Buy First Reliance for $163M in Southeast Push

Colony Bankcorp will pay $163 million in stock and cash to acquire First Reliance Bancshares, the Florence, South Carolina-based community bank, the companies said Wednesday. The transaction would give Colony, headquartered in Fitzgerald, Georgia, a foothold in its fourth Southeast state and push the combined institution to roughly $5 billion in assets.

Under the merger agreement, each First Reliance shareholder can elect to receive $19.75 in cash or 0.94 of a Colony share, with proration forcing a target mix of about 20% cash and 80% stock. The boards of both companies have unanimously approved the transaction, which is expected to close in the fourth quarter of 2026, subject to regulatory and shareholder approvals. Investors reacted by sending Colony’s share price down 5.6% on Thursday.

Colony Bankcorp Pays $163 Million to Step Into South Carolina

Colony Bankcorp, founded in Fitzgerald, Georgia, in 1975, operates branches across Georgia, Alabama, and the Florida Panhandle. First Reliance Bancshares, founded in 1999 in Florence, holds $1.1 billion in assets and runs branches across five of South Carolina’s largest metropolitan areas.

Heath Fountain, Colony’s chief executive officer, called the combination “a truly transformational milestone” in the joint merger announcement released Wednesday, and said it would let the combined company “capture market share in some of the most dynamic economies in the country.” The deal would extend Colony’s footprint into South Carolina while First Reliance keeps its name on its branches. Rick Saunders, First Reliance’s founder and chief executive officer, said the partnership “allows us to preserve our cherished culture while gaining the operational scale required to compete at the highest level.”

Cash Election, Stock Mix, and a Mortgage Lift

The merger consideration lets each First Reliance holder choose between $19.75 in cash and 0.94 of a Colony share for every First Reliance share. Proration rules in the agreement are designed to land the overall mix at roughly 20% cash and 80% stock, regardless of how shareholders elect.

On the combined balance sheet, the deal would push Colony to about $5 billion in total assets, $4.0 billion in total deposits, and $3.2 billion in loans, according to the joint release. That makes the new institution one of the larger community banks in the Southeast by asset count. Fountain told analysts on Thursday that the addition of First Reliance’s mortgage business would lift Colony’s residential lending profitability.

Colony expects the deal to add about 20% to its earnings per share in 2027, excluding one-time merger expenses. The earn-back on an estimated 12% dilution to tangible book value is projected at three to four years, per The Bank Slate, which reviewed the investor presentation.

The agreement also sets an outside termination date of March 24, 2027, extendable to April 23, 2027 if regulatory approval is the only remaining hurdle, and a $6,600,000 termination fee payable by First Reliance if its board walks away under specified circumstances. Both sides have signed voting agreements with their directors and executives to lock in shareholder approval. Keefe, Bruyette & Woods, a Stifel company, advised Colony on the deal; Hovde Group advised First Reliance, and Alston & Bird and Ward and Smith served as legal counsel. The mechanics are spelled out in the SEC 8-K filing on the merger agreement.

Who’s Moving Up After the Merger Closes

Rick Saunders, the founder of First Reliance who has run the company since 1999, will become Colony’s executive vice chairman, a member of Colony’s board, and a member of its executive team. First Reliance locations in South Carolina will continue to operate under the First Reliance brand after the merger closes.

Several other First Reliance executives are moving into Colony roles. Justin Strickland, currently president of First Reliance, will become Colony’s president for South Carolina; Robert Haile, First Reliance’s chief financial officer, will become chief investment officer and treasurer at Colony; Brook Moore, First Reliance’s chief credit officer, will become credit officer for South Carolina; and Chuck Stuart, president of the First Reliance Mortgage Division, will become co-president of Colony Mortgage. First Reliance director Rick Redden will join Colony’s board, while First Reliance Chairman Dr. Dale Lusk will keep an active advisory role with formal board observation rights.

1. Rick Saunders moves from founder and CEO of First Reliance to executive vice chairman, board member, and executive team member at Colony.
2. Justin Strickland moves from president of First Reliance to Colony’s president for South Carolina.
3. Robert Haile moves from CFO of First Reliance to Colony’s CIO and treasurer.
4. Brook Moore moves from First Reliance’s chief credit officer to Colony’s credit officer for South Carolina.
5. Chuck Stuart moves from president of the First Reliance Mortgage Division to co-president of Colony Mortgage.

On Thursday’s analyst call, Saunders told investors the message for South Carolina customers was continuity, not disruption. Rick Redden, First Reliance’s lead director, will also join Colony’s board of directors.

Joining forces, we are bringing scale and enhanced operational efficiency into our existing branch footprint.

That line came from Saunders, First Reliance’s founder and CEO, on the analyst call covered by American Banker.

Why South Carolina, and Why Right Now

South Carolina was the fastest-growing state in the country from 2024 to 2025, according to Census Bureau estimates released in January 2026, and First Reliance already operates in five of the Palmetto State’s largest metropolitan areas, including Charleston, Columbia, and Greenville. Fountain told analysts on Thursday that Colony is projecting faster population growth and larger household-income growth in First Reliance’s markets than in its own existing geographies. “The state of South Carolina has experienced significant growth over the last several years and is well-positioned to continue that trend,” he said on the call, per American Banker. The local growth backdrop lines up with Census Bureau growth estimates for South Carolina cities.

Fountain also framed the deal as a response to consolidation in South Carolina, which he said had reduced the number of high-touch, relationship-focused community banks. “By bringing Colony and First Reliance together, we are filling that void and establishing an institution that is large enough to handle major lending needs but local enough to remain focused on our customer relationships,” he told analysts. Both companies’ mortgage businesses are positioned as complementary, with First Reliance’s mortgage unit slotting into Colony Mortgage and adding residential lending scale. Saunders said the larger combined balance sheet will let his team deepen existing commercial relationships, telling one analyst, “My team’s already putting a list of names together. So yes, we will certainly take advantage of that.”

Why the Stock Slid 5.6% on the Day of the News

Colony’s share price fell 5.6% on Thursday, the day the deal was announced, according to American Banker. The drop came despite the press release’s promise that the transaction would be “immediately accretive to Colony’s earnings per share, excluding one-time merger-related expenses.” Investors had to weigh that language against a price tag of 162% of First Reliance’s tangible book value, per The Bank Slate.

The same week the deal was announced, Colony reported first-quarter 2026 earnings that came in below consensus. Per an Investing.com summary, EPS came in at $0.45 against a $0.48 estimate, and revenue reached $39.9 million against a $40.2 million forecast.

Management’s own projection is a 20% bump to EPS in 2027, but only after a 12% bite to tangible book value at closing. The earn-back window is three to four years on that dilution, per The Bank Slate, or “less than five years” as management put it on the call, per American Banker. For a stock that entered the week already wobbling on a soft quarter, the dilution calculus clearly landed harder than the EPS promise.

Colony’s market capitalization entering the deal was about $449 million, per Investing.com, against a transaction value of roughly $163 million, a ratio that helps explain why even a strategic, in-market deal can move the needle. The investor presentation also lays out a one-time merger expense tab of $16 million and a cost-savings target of 35% of First Reliance’s annual noninterest expense.

The Earn-Back Math and the Cost Cuts Behind It

The cost lever in the deal is heavy. Colony plans to cut 35% of First Reliance’s annual noninterest expense, according to the investor presentation summarized by The Bank Slate, and the one-time tab to get there is about $16 million of merger-related expenses. Both sides also framed the residential mortgage businesses as complementary rather than duplicative, a point management used to argue the deal would lift, not dilute, profitability in that line.

Management projects ~20% EPS accretion in 2027, but only after absorbing an estimated 12% tangible-book-value dilution at closing. The earn-back window in the investor presentation is three to four years, slightly tighter than the “less than five years” Fountain cited on the analyst call.

• $163 million: total transaction value.
• $19.75 cash or 0.94 Colony shares: per First Reliance share.
• ~$5 billion: combined assets after closing.
• ~20%: EPS accretion expected in 2027.
• ~12%: tangible book value dilution at close.
• 35%: share of First Reliance’s noninterest expense to be cut.

The closing calendar sets an outside termination date of March 24, 2027, with automatic extension to April 23, 2027 if regulatory approval is the only outstanding condition. If First Reliance’s board walks away under specified circumstances, the agreement calls for a $6,600,000 termination fee payable to Colony. Both companies’ directors and executives have signed voting agreements to back shareholder approval when the proxy goes out.

A Slow Southeast M&A Year With One Aggressive SC Bet

Southeast bank deal flow has thinned sharply in 2026. Per Seaport Research Partners, as of earlier this month, eight deals had been announced in the Southeast so far this year, compared with 36 for all of 2025.

Against that backdrop, Colony’s $163 million bet on First Reliance stands out, even though the deal still needs regulatory and shareholder approvals to close by year-end. It also comes about six months after Colony closed its most recent acquisition, of Thomasville, Georgia-based TC Bancshares, in December 2025. The combined institution would operate branches in Alabama, Florida, Georgia, and South Carolina, which would make it one of the larger community banks in the region. The transaction also offers a fresh data point for the sector on how investors price Southeast bank M&A in a year when most of the publicly traded buyers have stepped back from the auction block, similar to a Florida credit union’s recent purchase of a Georgia bank.

Frequently Asked Questions

When is the Colony Bankcorp and First Reliance deal expected to close?

The companies expect the deal to close in the fourth quarter of 2026, subject to customary regulatory approvals and shareholder votes from both sides. The merger agreement sets March 24, 2027 as an outside termination date, with automatic extension to April 23, 2027 if regulatory approval is the only remaining hurdle.

What will First Reliance shareholders receive?

Each First Reliance holder can elect to receive $19.75 in cash or 0.94 of a Colony share for every First Reliance share. Proration rules in the agreement are designed to deliver an overall mix of approximately 20% cash and 80% stock, regardless of how individual shareholders elect.

Who will run the combined bank in South Carolina?

Rick Saunders, First Reliance’s founder and CEO, becomes executive vice chairman at Colony and a member of its board. Justin Strickland moves from First Reliance president to Colony’s president for South Carolina. Robert Haile, First Reliance’s CFO, becomes Colony’s CIO and treasurer. Brook Moore becomes credit officer for South Carolina, and Chuck Stuart, head of First Reliance Mortgage, becomes co-president of Colony Mortgage.

Will First Reliance customers see any changes at their branches?

No immediate brand change. First Reliance branches in South Carolina will keep operating under the First Reliance name after the merger closes, and Saunders told analysts the message for customers is continuity.

What could stop the deal from closing?

Standard closing conditions apply, including shareholder approval from both companies, regulatory approvals, the absence of a material adverse effect, and a customary IRS tax opinion. If First Reliance’s board changes its recommendation or walks away under specified circumstances, it would owe Colony a $6,600,000 termination fee, and the agreement sets March 24, 2027 as the outside termination date.